Administration April 8, 2005

Survey: Retirement Plans Still Employee Magnet

August 28, 2003 (PLANSPONSOR.com) - A new survey provides the latest evidence of how important a retirement plan can be to attracting and keeping talented employees with nine out of 10 workers saying access to a 401(k) plan is important to them.
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According to the 2002 Transamerica Small Business Retirement Survey, 90% of employees ranked a 401(k) or other retirement plan as very or somewhat important – just behind the 97% who made that same judgment about having health insurance coverage. The survey polled workers and employers at small companies about retirement issues.

In fact, more than half of the employees (55%) said they would be very or somewhat likely to bail out of a job without a retirement plan for one that offered that benefit, the survey report said.

Employers apparently recognize the handwriting on the wall; 67% felt workplace retirement benefits are very or somewhat important to bringing top-tier workers into the fold. But many companies without retirement programs still aren’t ready to kick one off; 44% without such a program said they aren’t likely to start one in the next two years.

Interestingly, nearly three quarters (73%) of workers would go for an employee-funded plan with a company match – like a 401(k) plan – over the more traditional company-funded defined benefit pension program.

There was widespread agreement between employers and employees that much of the workforce is still clueless when it comes to figuring out how to be a prudent retirement investor, the survey found. Three quarters (76%) of employees admitted they don’t know enough about retirement financial planning – up from 65% in 2001 while 91% of managers surveyed said they suspect their workers are knowledge deficient about retirement funding.

However, while 32% of workers strongly agreed that they craved information or advice from their companies about how to reach their retirement goals, only one in five employers recognized the need.

Economic Reaction

The Transamerica poll also asked about how employees have reacted to current events such as the bear market and the sluggish economy.

One in five workers stirred up their asset allocation pot in the past year; of those:

  • 66% fled to lower risk funds
  • 35% tiptoed into higher risk fund offerings
  • 31% moved laterally into funds with like risk
  • 28% bailed out of company stock
  • 15% moved money into company stock

Three out of four kept their deferral rate the same during the year while 18% decided to up the amount being taken out of their paycheck. At the same time, more boomers than Gen Xers (39% versus 30%) fret that their retirement age will have to be postponed.

They survey was conducted between October 1 and October 17, 2002 and covered 300 small business executives with between 10 and 500 workers as well as 765 full-time small business employees.

The survey can be obtained at http://www.ta-retirement.com/TheCenter/tcrs_content_viewer.aspx?id=/content/TCRS/ResearchEvents/Survey2002 .

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